I was definitely disappointed with management regarding the failure to issue a profit warning. In my opinion, “poor predictability” is a poor excuse when the figures—especially regarding revenue—must have been ready a long time ago. They should have provided preliminary earnings info, as the revenue performance had a major impact on the balance sheet and, consequently, on the risk level.
Otherwise, the report itself was actually good. At this stage, the bottom line carried relatively little weight as the market was focused on the balance sheet situation, and this report addressed that well. Guidance was surprisingly strong, and the adjusted EBITA in particular will receive solid support from closing the Tampere warehouse and the second warehouse in France. If we could also see even a slight uptick in revenue in France, losses there would at least decrease.
It was also pleasing to hear that Tran Am had a record year in the UK. Hopefully, sufficient resources have been allocated there.
Now we face a couple of easy comparison periods, given that snow conditions have been poor for a couple of winters. A decent snowy winter, and after H1 we could already be well ahead of the last fiscal year. In H2, the results of the ramp-up in France will then determine how much room there is to improve compared to this year. At the very least, this Q4 will be an easy baseline to beat.
The CEO described the guidance as conservative, at least regarding revenue (might have been a slip of the tongue), but at the midpoint of the adjusted EBITA guidance at €4m, the comparable EPS adjusted for goodwill amortization would climb close to €0.3/share, i.e., a P/E of 8 at the current share price (roughly €4m EBITA - €2.1m financial expenses - taxes = €1.52m). Well, Duell’s track record of hitting its guidance has been rather poor lately, and new problems have always cropped up just as an older one might have been resolved.
In my eyes, the most pleasing aspect of the report was the significant drop in net debt, meeting covenants, and the newly renewed financing agreement. Duell’s debt load is now at a quite manageable level. Earnings just need to be brought up, and at least the comparison periods are now easy. In addition, the CEO believed that one-off items are now mostly behind them. Risks are lower than before, but in terms of earnings, it remains to be seen.